Start-up investors are cashing out in far less time than they did in the recent past, according to a recent study by Securities Data Co. The study tracked 623 companies that received expansion-stage financing (defined as second-stage, third-stage, or bridge financing) from venture capitalists and went public during the years 1983 to 1993. The amount of time it takes companies to go public after receiving expansion-stage venture capital is "definitely shrinking," notes Securities Data analyst Robert Liu, adding, "these findings are significant because they contradict the belief that venture capitalists are long-term investors." Liu attributes the shrinkage to the boom initial-public-offering market of the last three and a half years, with venture capitalists spotting "a window of opportunity and rushing to cash out" in a shorter period of time.

-- Alessandra Bianchi

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Average Number of Years It Takes Companies to Go Public After Receiving Expansion-Stage Venture-Capital Funds (Five-Year Average, 1989-1993)
Consumer-related products 2.2

Industrial products 2

Medical/health-related products and services 2

Computer-related products 2

Communications 1.9

Chips/electronic equipment 1.8

Other services/manufacturing 1.6

Biotechnology 1.6

Energy .4

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The Big Picture: Total Average in Five-Year Periods
1974-78 4.88

1979-83 3.29

1984-88 3.26

1989-93 1.71

Source: Securities Data Co./Venture Economics.